Indian equity benchmarks ended the Wednesday’s trade in red terrain as Reserve Bank of India (RBI) decided to keep the policy repo rate unchanged. Sentiments remained downbeat since morning as markets after a negative start never looked confidant and extended their southward journey to end below their crucial 32,600 (Sensex) and 10,050 (Nifty) levels. Traders remained concerned with report that public debt of the central government rose by 2.53% to Rs 65.65 lakh crore in the July-September quarter compared to the previous quarter. Internal debt constituted 93% of public debt at end-September 2017, while marketable securities accounted for 82.6% of public debt. Meanwhile, the newly-constituted 15th Finance Commission held its first meeting and decided to involve think-tanks in drawing up its report that will primarily deal with devolution of revenue between the Centre and states.

Markets extended southward journey after RBI’s Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.0% but has raised the inflation forecast for remainder of the current financial year to 4.3-4.7%. The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth. Sentiments also remained dampened on reports that India's economy though showed signs of recovery in Q2FY18 but overall business sentiment in the country during the same period got hit by the new Goods and Services Tax (GST) regime. As per the National Council of Applied Economic Research’s (NCAER) latest survey, its Business Confidence Index (BCI) fell 12.9% from the earlier quarter and 11.1% on year-on-year basis, due to GST.

Weak global cues too dampened sentiments with European counters trading in red in early deals, as investors monitored corporate earnings and fresh economic data. Asian markets ended mostly in red, led by the Japanese market which is down by around a percent as commodities companies led declines following a rout in copper prices and as investors assessed the impact of proposed tax cuts.

Back home, metal stocks lost shine following correction in commodities prices in international market as investors raised doubts over China demand for metals. Mixed reaction was witnessed in aviation stocks on International Air Transport Association (IATA) report that with rising air passenger numbers, as much as 1% of the global GDP - translating into $861 billion - is projected to be spent on air transport in 2018. However, select stocks from leather, textiles, agriculture products and carpets industry remained in focus, as government yesterday announced incentives worth a total Rs 8,450 crore to boost exports and employment in labour-intensive sectors in the mid-term review of the five-year foreign trade policy (FTP) that was rolled out in 2015. Incentives under the Merchandise Export from India Scheme (MEIS) have been raised to 4% from 2% for leather, textiles, agriculture products and carpets.

FII’s Activity 6th-Dec-17

The FIIs as per Wednesday’s data were net sellers in equity segment, while they were net buyers in debt segment, according to data released by the NSDL.

In equity segment, the gross buying was of Rs 3752.07 crore against gross selling of Rs 5155.17 crore. Thus, FIIs stood as net sellers of Rs 1403.10 crore in equities.

In the debt segment, the gross purchase was of Rs 1892.57 crore with gross sales of Rs 743.39 crore. Thus, FIIs stood as net buyers of Rs 1149.18 crore in debt.